1: According to legend, a Nordstrom salesperson gladly gave a customer a refund on a set of automobile tires, even though Nordstrom has never sold tires.
The legend is true, write Robert Spector and breAnne Reeves in The Nordstrom Way.
In 1975, Nordstrom acquired three stores in Alaska from the Northern Commercial Company, a full‐line department store that sold many products, including tires. After the acquisition, many product lines were eliminated, including the tire store across the street from the main store, which Nordstrom later stocked with menswear and shoes.
Here’s how former co-chairman John Nordstrom describes the scene: “I was visiting Fairbanks soon after the change [from Northern Commercial to Nordstrom] and was standing in the back of the store with our manager. The doors opened for the day, and we saw a small, older man walking across the street carrying a tire. He entered the store and looked around, seemingly confused. Our manager started toward the door, and I grabbed him and said, ‘Let’s stay here and see how our team handles this.’
“Our young salesman greeted the customer and asked to help him. The little guy said he had purchased the tire here, and it didn’t fit his car, so he wanted to return it. I was so happy when our young salesman asked if the customer remembered how much he had paid for it. The guy thought it was about $25. Our guy opened the cash register and handed him the $25, and told him he hoped he would return so we could help him with clothing or shoes.
“We took the tire and nailed it up in the stockroom as an example of how you give customer service. We didn’t realize the story would become a wonderful cultural pillar of the company,” John recalls.
2: Nordstrom’s “virtually unconditional, no‐questions‐asked money‐back guarantee” dates back to the 1920s when Nordstrom was a shoe store in downtown Seattle. “Shoes are one purchase that can be confirmed only by use—walking around to make sure they fit,” write Robert and breAnne.
“Brothers Everett, Elmer, and Lloyd [Nordstrom] of the second generation dreaded having to deal with obviously outrageous or unreasonable returns, so, they reckoned, if they could pass off the responsibilities for the adjustments and complaints, their enterprise would be more personally enjoyable.”
Elmer recalled telling the salespeople, “If the customer is not pleased and comes to us, we’ll give her what she wants, anyway.”
The brothers tracked the costs for the first year and discovered they could afford the return policy, which soon helped differentiate them from their competition. “In a world where most retailers make returns an ordeal, Nordstrom made the experience as painless as possible, which generated priceless word‐of‐mouth advertising,” the authors write.
Returns “are the best way in the world for us to own the customer forever. When somebody comes in with a return, that’s the time to separate yourself from the competition. You have to remember that the person who’s returning the item is back in our store. We want them to see that we’re on their side,” notes Jim Nordstrom. “If you take back the item with a smile and no questions asked and the customer walks out the door happy, what’s that worth? A lot. It’s the best sales closure we have as a company. What a wonderful opportunity for a salesperson to own a customer.”
Nordstrom has a generous return policy “not because we’re good guys; we do it because it works,” said former co-chairman Bruce Nordstrom. “We want to do more business. It serves our purpose to be nice to people, to wait on them, to turn the other cheek.”
3: The Nordstrom philosophy is that each interaction with a customer, regardless of whether it is a return or a sale, is an opportunity to build trust.
Empowering salespeople with the freedom to accept returned merchandise “is the most noticeable illustration of the Nordstrom culture, because it is the one that most obviously affects the public,” write Robert and breAnne. “If a customer comes into the store with a pair of five‐year‐old shoes and complains that the shoes are worn out and wants her money back, a Nordstrom employee has the right to use her judgment to give the customer her money back.”
Nordstrom’s message on accepting returns is: “If you’re ever in doubt as to what to do in a situation, always make a decision that favors the customer before the company.”
But doesn’t an unconditional return policy invite abuse?
Of course. But central to the Nordstrom philosophy is not punishing the many for the dishonesty of a few. That said, Nordstrom will not take a return in extreme situations. “Now, if somebody goes too far, we’ll say that although fairness is our credo and that’s how we try to live our retail life, this adjustment is not fair,” Bruce notes. “The ones we say ‘no’ to are people who have a lengthy history of wearing something and then returning it.”
The Nordstrom tire story is part of the retailer’s lore. But the search for great word-of-mouth marketing continues. “We have to create new stories every day,” says Chief Innovation Officer Geevy Thomas. “We want to know what your tire story is from yesterday. What are we doing today to wow the customer?”
Reflection: What strategies might my organization employ to connect with our clients in a meaningful way?
Action: Discuss with my team or with a colleague.